Thursday, November 20, 2008

Will "Doomsday" Budget Prevail?

New York's Metropolitan Transportation Authority today put forth a "doomsday" budget for 2009 that calls for service reductions, layoffs and a 23 percent increase in fare and toll revenue to close a $1.2 billion budget gap that is expected to swell to $3 billion by 2012. Under the plan, base subway and bus fares would jump from $2 to $2.50. Long Island Rail Road and Metro North passengers would pay more, as would motorists who use MTA's bridges and tunnels.

The pain is real, but the situation also tests the commitment of politicians and taxpayers to supporting public transit in the most transit-dependent region in the United States. MTA Executive Director Eliot Sander pointed out that the pain could be alleviated if the state legislature acts next year to forestall the fare hikes and service cuts or if the Ravitch Commission, which is investigating new ways of funding the MTA, comes up with viable solutions.

I'm cautiously hopeful that fares and tolls won't rise as much as feared, i.e. that Albany will act in response to pressure from politicians wanting to look like heroes. (New York City elects a mayor in 2009 and the largest suburban counties - Nassau, Suffolk and Westchester elect county executives.). On the other hand, the state of the economy and New York's financial woes put a limit on how much taxpayers will be able to bail out the MTA.

The higher fares will hurt the weakest the most, i.e. those who travel from the outer boroughs to low-paying jobs. They comprise a substantial part of New York's population, and their interests are, to some extent, aligned with the more affluent commuters from the suburbs. Student who attend The City University of New York and go to school by subway or bus face a double whammy since Gov. David Paterson has proposed a $600 (15%) tuition hike.

Economics 101 tells us that higher transit fares and lower gasoline prices are likely to yield a shift in travel from railways to highways. That's one of the downsides of the market: people vote with their pocketbooks, even when there are hidden social costs, e.g. congestion, greenhouse gas emissions.

The problems affecting New York's MTA are part of a national trend. They are just more prominent here because of our transit dependency.

I believe we can cure a lot of ills by imposing stiff taxes on gasoline to promote fuel conservation, encourage travelers to use public transit, keep transit fares low and invest in new transit infrastructure. Not only can it support all these goals, but it can be an antidote to higher oil prices once the economy improves and it can give auto manufacturers incentives to produce and market fuel efficient and hybrid cars instead of the gas guzzling trucks and SUVs now rolling off the assembly lines and taking up space in dealer showrooms, parking lots and highways.

Editor's note: Details of the MTA plan at TransitBlogger.com

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